---
title: "Red Bull's Serial Crises"
description: "If China Red Bull were to disappear, what would the energy drink market look like? This hypothesis is not far-fetched, given the intensifying competition. In late May, Huabin Group's Warhorse gained a health food label, and half a month later, Thailand's TCP Group confirmed that Red Bull Anji would enter China. Since August 2016, the trademark dispute between TCP and Huabin has seen over 20 rounds of legal battles."
author: "有趣有料的"
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published: "2019-07-22"
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# Red Bull's Serial Crises

> If China Red Bull were to disappear, what would the energy drink market look like? This hypothesis is not far-fetched, given the intensifying competition. In late May, Huabin Group's Warhorse gained a health food label, and half a month later, Thailand's TCP Group confirmed that Red Bull Anji would enter China. Since August 2016, the trademark dispute between TCP and Huabin has seen over 20 rounds of legal battles.

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**If China Red Bull were to disappear, what would the energy drink market look like?**
This hypothesis is not far-fetched, but stems from the increasingly intense 'gunpowder smell' in the market. At the end of May, Warhorse, strongly supported by Huabin Group, obtained a health food label. Half a month later, Thailand's TCP version of Red Bull Anji made an official announcement, confirming the long-rumored entry of Red Bull Anji into China.
Since August 2016, the trademark dispute between TCP, the owner of the Red Bull brand, and Huabin Group, the operator of Red Bull in China, has gone back and forth for 20 rounds. The 'two bulls butting heads' situation has left smaller players circling, ready to pounce.
The most aggressive is Dongsheng Teyin, once called a 'Red Bull imitator' by the industry. Leveraging its price advantage, it has firmly secured second place in the industry, not only securing naming rights for many popular programs but also recently starting IPO tutoring, preparing to leverage capital to showcase its prowess.
For other energy drink brands, this is the best time; they all want to become the next Red Bull.
**The Workers' Drink**
The inventor of Red Bull energy drink is Xu Shubiao, founder of TCP Group. For FMCG, clear and accurate positioning is crucial; from the start, Xu positioned Red Bull as a workers' drink, targeting truck drivers and other manual laborers.
In the late 1970s, Thai workers chose energy drinks to replenish energy. At that time, the highest market share energy drink in Thailand was the Japanese brand Lipovitan. Xu's TCP Group saw the opportunity and spent three years developing Red Bull energy drink.
To open the market, the newly established Red Bull spared no effort in marketing activities. **Heavy TV advertising, sponsoring Muay Thai fights, and running lotteries—these marketing tactics are still used by Red Bull China and Dongsheng Teyin today.**
The marketing proved effective immediately; by 1994, Red Bull's market share in Thailand had reached 53%.
While TCP Group was conquering the Thai market, Red Bull caught the eye of an Austrian businessman who slightly modified the Thai version to create the Austrian version, which became popular among young people in Europe.
When Austrian Red Bull was born, the Chinese market was dominated by Jianlibao. After its success at the Los Angeles Olympics, Jianlibao was hailed as the 'Oriental Magic Water,' spreading the concept of sports drinks across the country.
The success of Austrian Red Bull and Jianlibao must have fueled Xu Shubiao's ambition to go international, especially to China. In 1993, he decided to set up a factory in Hainan to enter the Chinese market.
Red Bull is a functional beverage with special uses, but at that time, China did not have a functional beverage category. Therefore, Xu's application in China was repeatedly rejected.
Yan Bin, who had worked in Thailand for years and was familiar with China's conditions, appeared at the right time. Like Xu, he came from a poor family and became a well-known real estate developer in Thailand. Their similar experiences led to mutual appreciation, and their cooperation was quickly established.
In 1998, Red Bull Vitamin Company (Red Bull China) was established, with the Xu family and Yan Bin as the largest and second-largest shareholders, respectively. After the joint venture was formed, TCP authorized the joint venture as the only producer of Red Bull in China. In practice, TCP provided the brand and technology, while Yan Bin handled actual operations.
**The Founder Passes, Disputes Arise**
For Red Bull China and the entire functional beverage industry in China, Yan Bin is a 'godfather' figure.
In 1995, Yan Bin brought Red Bull to China for sale. From the start, Yan Bin did not treat Red Bull as a 'workers' drink'; he priced it at 5.5–6 yuan per can, far higher than the price in Thailand.
To open the market, Yan Bin spent heavily on advertising after the CCTV Spring Festival Gala and created classic slogans like 'Drink Red Bull when thirsty, and even more when sleepy or tired' and 'Your energy exceeds your imagination.'
With catchy slogans and aggressive marketing, Red Bull inevitably entered thousands of households. At its peak, **Red Bull held over 80% of the functional beverage market share.**
# ▵ Yan Bin, Chairman of Huabin Group
The success of Red Bull brought Yan Bin immense wealth. When Xu Shubiao passed away in 2012, Yan Bin's net worth was 50 billion yuan, ranking fourth on the Hurun Rich List that year.
Such wealth made the Xu family descendants envious. After Xu's death, his son Xu Xinxiong engaged in a long 'tug of war' with Yan Bin. According to Caijing, Xu Xinxiong said in an interview that China Red Bull had not held a single board meeting in the 20 years before 2015, and as the largest shareholder, the Xu family had not received a single dividend.
**The Xu family, citing the 20-year business term, began to try to take back the Red Bull trademark. Yan Bin's side countered that the initial agreement was for a 50-year term, but due to regulations, the registered term was set at 20 years. As the cultivator of the Chinese market, he also called TCP the 'peach picker.'**
Starting in August 2016, TCP sued several companies operated by Yan Bin's Huabin Group for trademark infringement and unfair competition. Since then, the two sides have fought several rounds over the trademark dispute.
According to incomplete statistics, **the number of dispute cases between the two sides exceeds 20.**
The lawsuits are still unresolved, but TCP's Red Bull Anji has already been launched in China, eager to enter the market. The Xu family is attempting to bypass Yan Bin and independently operate in the Chinese market.
For Red Bull Anji, opening the market under the pressure of Red Bull China remains a significant challenge.
Currently, Red Bull Anji products are concentrated in the southern market, with no presence in the north. Distributor channel resources are relatively fixed; every channel breakthrough by Anji is a direct competition with Red Bull, and the intensity of the fight can be imagined.
According to beverage industry analyst Chen Wei, Red Bull Anji's recruitment and sales in Guangdong have not been ideal. However, a beverage distributor in Yunnan has been waiting for Anji to be distributed locally.
'Our Yunnan market originally had many Thai Red Bulls smuggled from Thailand. In terms of taste, TCP's Red Bull Anji has a mass base in Yunnan. Many distributors who previously handled Red Bull are inquiring about Anji,' the distributor told Shijie.
On the other side, Huabin Group is also facing the impact of Red Bull Anji. A Red Bull China employee told Shijie that Red Bull's channel costs are lower than before, and financial audits are stricter.
Huabin has also prepared a two-pronged approach in products. In 2016, Huabin Group launched its own brand, Warhorse Energy Vitamin Drink, aiming to create another major functional beverage product and reduce dependence on Red Bull.
In 2018, the 60-year-old Yan Bin declared at the China Functional Beverage Innovation and Development Conference: 'I hope to create a truly internationally influential national functional beverage brand, entering the international market with Chinese characteristics, Chinese quality, and Chinese brands.'
However, judging from market reactions, the highly anticipated Warhorse has performed far below expectations. Nielsen data shows that in 2017, Red Bull held 58% of the functional beverage market share, and besides it, brands like Lehu and Dongsheng Teyin left Warhorse behind.
At this stage, Warhorse is not up to the task. Huabin Group's publicly announced performance for the first half of 2019 shows that the group's FMCG sales were 15 billion yuan, of which Red Bull sales were 13.9 billion yuan.
The dispute between the two Red Bulls has cast a shadow over Red Bull China's performance. In 2017, Red Bull China's sales fell to 19.6 billion yuan, and although it returned to 20 billion yuan in 2018, it still lags behind the 23 billion yuan sales scale of 2015.
Red Bull's current situation provides an excellent opportunity for other energy drink brands.
**The Disruptor Dongsheng**
Dongsheng Beverage Co., Ltd. was established in 1987, originally a state-owned old-brand beverage company in Shenzhen, with herbal tea and drinking water as its main products. After the state-owned enterprise reform, sales general manager Lin Muqin became the company's helmsman.
In 2009, Dongsheng Beverage launched a new product, 'Dongsheng Teyin,' officially entering the functional beverage industry. At that time, Red Bull China was already the industry leader, and Dongsheng Teyin was once regarded as a 'Red Bull imitator.'
**In fact, Dongsheng Teyin has always followed a low-price route. Compared to Yan Bin's Red Bull, Dongsheng Teyin's positioning and development path are even closer to Thailand Red Bull's 'workers' drink.'**
A 250ml can of Red Bull costs between 5.5 and 6 yuan, while a 500ml bottle of Dongsheng Teyin costs around 5 yuan. In comparison, Dongsheng Teyin's price is only half that of Red Bull.
Price wars are an important way for FMCG to capture market share, but long-term low-price strategies can label a brand as 'low-end.' Red Bull, which started as a 'workers' drink,' faced challenges in Thailand to develop a younger, higher-end brand image. Such challenges apply equally to Dongsheng Teyin.
To reverse its brand image, Dongsheng Teyin has spared no effort in marketing. In 2015, Dongsheng Teyin proposed the slogan 'Stay awake to fight when young,' frequently appearing in film, television, sports, and other areas, attempting a youth-oriented strategy. In the past two years, as Red Bull has been embroiled in brand disputes and reduced marketing activities, Dongsheng Teyin has taken advantage of the gap.
Dongsheng Teyin has sponsored popular TV dramas and variety shows such as 'Ode to Joy,' 'The Mystic Nine,' and 'Go Fighting! 3.' In 2018, it replaced Red Bull as the sponsor of the Chinese Super League and became a CCTV World Cup broadcast sponsor for 165 million yuan.
Compared to Red Bull's classic small gold can packaging, Dongsheng Teyin's main product uses plastic bottles, which are cheaper than cans, more portable, and easier to store.
Dongsheng Teyin's aggressive marketing and differentiated competition have led to rapid performance growth. In 2016, Dongsheng Teyin's sales nearly doubled; in 2018, the company announced its performance reached 5 billion yuan.
In May this year, Dongsheng Teyin filed for tutoring with the Shenzhen Securities Regulatory Bureau, putting its IPO on the agenda. The news was met with applause. The former 'Red Bull imitator' is now seen by many as a dark horse in the industry.
Will such a Dongsheng Teyin pose a threat to Red Bull?
In 2018, Red Bull's sales exceeded 20 billion yuan, while Dongsheng Teyin was only a quarter of that. **The massive marketing 'taking advantage of the gap' can bring a surge in performance, but it also inevitably leads to rising sales expenses.**
Many large FMCG companies have ample cash flow and are not keen on going public, such as Laoganma and Nongfu Spring. Now that Dongsheng Teyin is seeking an IPO, besides wanting to use capital for expansion, it inevitably raises suspicions about whether market expansion has put pressure on the company's cash flow.
In terms of sales, Dongsheng Teyin is already the industry's second, **but at this stage, this 'dark horse' is far from threatening Red Bull.**
**Who Can Become the Next Red Bull?**
Energy drinks are a type of functional beverage. Compared to other beverage categories, functional beverages have higher prices and larger profit margins, and in recent years, their market growth has far outpaced other beverage categories. According to data from China Commercial Industry Research Institute, from 2012 to 2016, the average annual compound growth rate of retail volume in China's functional beverage industry was about 14%.
The optimistic market prospects and the dispute between the two Red Bulls provide an excellent opportunity for latecomers like Dongsheng Teyin and Lehu to encircle and hunt. They are ambitious, but becoming Red Bull is not easy.
Dongsheng Teyin and Dali's Lehu are the two giants in the energy drink market besides Red Bull, but even so, their sales are insignificant compared to Red Bull.
In 2018, Red Bull's sales exceeded 20 billion yuan, Dongsheng Teyin was only a quarter of that, and Lehu's sales were even less than one-sixth of Red Bull's.
After more than two decades of development, **Red Bull's market has long radiated across the country. In contrast, Dongsheng Teyin's advantage lies in the south,** and the northern market still needs expansion.
Red Bull was the pioneer of functional beverages in China, facing little competitive pressure when the brand rose. Now, the functional beverage market is a red ocean, and to grab market share, one must fight fiercely.
For FMCG, the importance of brand is self-evident. Red Bull China's core competitiveness is not the product itself, but the Red Bull brand. 'Red Bull' brings recognition from consumers and distributors, and no similar brand can match it at this stage.
Existing hunters have no essential difference from Red Bull in product formulas, functions, and brand marketing; even Dongsheng Teyin's slogans are similar to Red Bull's. These brands, regarded as Red Bull imitators, can only become the next Red Bull if Yan Bin's Red Bull China loses the 'Red Bull' brand, but the probability of that happening is extremely low.
In the view of industry analyst Zhu Danpeng, **at this stage, TCP's Red Bull Anji poses little threat to Huabin Group's Red Bull, and the lawsuit between the two sides will not be concluded in the short term. Yan Bin's Red Bull China is not at risk of losing the brand for now.**
Chen Wei is more optimistic, believing that the trademark battle between the two Red Bulls stems from TCP's dissatisfaction with profit distribution. In the future, it is highly likely that the two sides will redistribute profits and reconcile.
**It is difficult for brands imitating Red Bull to become the next Red Bull, but seizing a share of the pie during the chaos is inevitable.**
Red Bull contributes over 90% of Huabin's FMCG performance, yet there is little product innovation or iteration. The young people who drank Red Bull twenty years ago are now middle-aged, but Red Bull is still the same Red Bull, which is not a good sign.
For Red Bull, turbulent times have already begun. However, the real opponent is not the 'peach picker' Yan Bin mentions, nor the imitators, but Red Bull itself.
Source: 'Research on Brand Creation of Sino-Thai Red Bull Functional Beverage'
Article source: Shijie (ID: ishijie2018)


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